Thanks for the detailed reply, John.
About the production cost of oil, I'm still a bit confused about the very abrupt step change in costs of oil production. The market behaviour during this century implies that oil can either be conventional at $30/barrel or less or unconventional at $80/barrel or more. It really strikes me as odd that there seems to be almost nothing in between. This situation creates the extreme price volatility we saw over the past decade where prices are very low if conventional oil production is sufficient and very high if not.
However, the graph compiled by the IEA in my linked post above suggests that there is a lot of oil available in the $40-60/barrel range. Almost all conventional oil and EOR operations can be carried out in this range together with a significant portion of the heavy and tight oil resource base. If this is indeed the case, the oil industry should be able to eventually reach a new steady state in this price range after some time of technology and market adaption. The historical price action where global market prices can either be $30/barrel or $100/barrel (and nothing in between) should only be a transient phase as the market adapts to reaching peak cheap conventional oil.
The danger is, however, that the willingness of the economy to pay $100/barrel for oil can create a strong incentive for those controlling cheap resources to limit production in order to maintain these high prices. I hope this perverse incentive will not have a major effect going forward. If it has, we will have to endure many more years of economic inefficiency until the global economy refuses to pay $100/barrel for oil, either because it simply cannot or because it has reduced demand sufficiently through efficiency and alternative fuels.
About fertility rates, I have read many times that population is the multiplier of every other aspect of the 21st century sustainability crisis and that economic development is the most effective way in which to reduce population growth (most developed nations are below the replenishment rate). Rapid economic development of poorer nations is therefore absolutely crucial for long term sustainability and cheap oil is essential for making this happen.